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October auto sales expected to rise

The auto industry looks to post another good sales month in October, according to early projections.

Auto research company J.D. Power and Associates estimates an annual industry sales pace of 13.1 million vehicles for the month, about the same as September and a big jump from earlier in the year.

Economists say such a rate would be an encouraging sign that the economy is not slipping back into recession. J.D. Power based its estimate on transaction data from more than 8,900 retail franchisees, or about half the dealerships in the United States.

“After a solid September selling rate, there were questions as to whether the strength would continue into October, given continued concerns with the economy,” said John Humphrey, a J.D. Power senior vice president. “However, consumers are again returning to dealerships, keeping the sales pace more consistent with the strength seen at the beginning of the year.”

The firm estimated that October new-vehicle retail sales – stripping out rental fleet, commercial and government auto purchases -- would reach an annual pace of 10.5 million units. The year-over-year increase in the selling rate is expected to reach 11 percent, the second double-digit growth rate in a row, and comes after four months of single-digit growth.

Humphrey said that retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

Even though auto market is strengthening, J.D. Power is still hedging its bets on next year. It is slicing its 2012 forecast to 13.8 million units for total light-vehicle sales from 14.1 million.

“While there have been recent positive signs in the economy and we expect another recession will not materialize, the recovery pace for 2012 is taking another hit, although a complete halt in growth is unlikely.” said Jeff Schuster, J.D. Power’s executive director of global forecasting